v3.26.1
Investment Securities
 6 Months Ended
Jun. 30, 2026
Investments, Debt and Equity Securities [Abstract]  
Investment Securities Investment Securities
 
Our investment securities portfolio consists of obligations of state and political subdivisions and debentures of U.S. government-sponsored enterprises ("GSEs"), such as the Federal National Mortgage Association ("FNMA"), Federal Farm Credit Banks Funding Corporation ("FFCB") and Federal Home Loan Bank ("FHLB"). We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by government agencies and GSEs, as reflected in the following table.
Held-to-maturity:
Amortized Cost 1
Allowance for Credit LossesNet Carrying AmountGross UnrealizedFair Value
The Bank did not hold any HTM securities at June 30, 2026. In the fourth quarter of 2025, the Bank completed a balance sheet repositioning and reclassified its HTM portfolio into AFS. The Bank then sold securities with a book value of $593.2 million at a pre-tax loss of $69.5 million.

Obligations of state and political subdivisionsCorporate bonds
A summary of the amortized cost, fair value and allowance for credit losses related to securities available-for-sale as of June 30, 2026 and December 31, 2025 is presented below.
Available-for-sale:
Amortized Cost 1
Gross UnrealizedAllowance for Credit LossesFair Value
(in thousands)Gains(Losses)
June 30, 2026
Securities of Government Agencies and GSEs:
   CMBS issued by FHLMC2, FNMA3 and GNMA4
$462,043 $83 $(15,000)$— $447,126 
CMOs issued by FHLMC, FNMA and GNMA173,145 223 (1,922)— 171,446 
MBS pass-through securities issued by FHLMC, FNMA and GNMA558,213 64 (8,437)— 549,840 
Debentures of government- sponsored enterprises29,988 — (6,395)— 23,593 
Obligations of state and political subdivisions58,071 — (7,245)— 50,826 
Total available-for-sale$1,281,460 $370 $(38,999)$— $1,242,831 
December 31, 2025
Securities of Government Agencies and GSEs:
   CMBS issued by FHLMC, FNMA and GNMA$470,598 $1,052 $(12,347)$— $459,303 
   CMOs issued by FHLMC, FNMA and GNMA208,752 818 (949)— 208,621 
MBS pass-through securities issued by FHLMC, FNMA and GNMA583,409 1,639 (2,742)— 582,306 
Debentures of government- sponsored enterprises29,988 — (6,294)— 23,694 
Obligations of state and political subdivisions61,214 — (7,326)— 53,888 
Total available-for-sale$1,353,961 $3,509 $(29,658)$— $1,327,812 
1 Amortized cost and fair value exclude accrued interest receivable of $4.4 million and $4.8 million at June 30, 2026 and December 31, 2025, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.
2 Federal Home Loan Mortgage Corporation
3 Federal National Mortgage Association
4 Government National Mortgage Association
The amortized cost and fair value of investment debt securities by contractual maturity at June 30, 2026 and December 31, 2025 are shown below. Expected maturities may differ from contractual maturities if the issuers of the securities have the right to call or prepay obligations with or without call or prepayment penalties.
June 30, 2026December 31, 2025
Available-for-SaleAvailable-for-Sale
(in thousands)Amortized CostFair ValueAmortized CostFair Value
Within one year$17,992 $17,942 $21,905 $21,884 
After one but within five years295,881 293,340 277,409 277,643 
After five years through ten years396,972 381,305 366,118 364,430 
After ten years570,615 550,244 688,529 663,855 
Total$1,281,460 $1,242,831 $1,353,961 $1,327,812 

Sale of investment securities and gross gains and losses are shown in the following table:
Three months endedSix months ended
(in thousands)June 30, 2026June 30, 2025June 30, 2026June 30, 2025
Available-for-sale:
Sales proceeds$— $167,017 $— $167,017 
Gross realized gains— — — — 
Gross realized losses$— (18,736)$— $(18,736)

The reported values of pledged investment securities are shown in the following table.
(in thousands)June 30, 2026December 31, 2025
Pledged to the State of California:
Secure public deposits in compliance with the Local Agency Security Program$262,677 $311,543 
Collateral for trust deposits991 1,010 
   Collateral for Wealth Management and Trust Services checking account1,242 1,260 
Total investment securities pledged to the State of California264,910 313,813 
Bankruptcy trustee deposits pledged with Federal Reserve Bank1,940 1,992 
Pledged to FHLB Securities-Backed Credit Program219,242 224,787 
Pledged to the Federal Reserve Discount Window264,990 297,610 
Total pledged investment securities$751,082 $838,202 

There were 194 and 114 securities in unrealized loss positions at June 30, 2026 and December 31, 2025, respectively. Those securities are summarized and classified according to the duration of the loss period in the tables below:
June 30, 2026< 12 continuous months≥ 12 continuous monthsTotal securities
 in a loss position
(in thousands)Fair valueUnrealized lossFair valueUnrealized lossFair valueUnrealized loss
Available-for-sale:
CMBS issued by FHLMC, FNMA and GNMA$302,536 $(2,374)$105,426 $(12,626)$407,962 $(15,000)
CMOs issued by FHLMC, FNMA and GNMA94,421 (996)15,020 (926)109,441 (1,922)
MBS pass-through securities issued by FHLMC, FNMA and GNMA500,109 (5,973)12,670 (2,464)512,779 (8,437)
Debentures of government- sponsored agencies— — 23,593 (6,395)23,593 (6,395)
Obligations of state and political subdivisions6,795 (25)44,031 (7,220)50,826 (7,245)
Total available-for-sale903,861 (9,368)200,740 (29,631)1,104,601 (38,999)
December 31, 2025< 12 continuous months≥ 12 continuous monthsTotal securities
 in a loss position
(in thousands)Fair valueUnrealized lossFair valueUnrealized lossFair valueUnrealized loss
Available-for-sale:
CMBS issued by FHLMC, FNMA and GNMA$142,774 $(218)$108,282 $(12,129)$251,056 $(12,347)
CMOs issued by FHLMC, FNMA and GNMA27,833 (165)36,861 (784)64,694 (949)
MBS pass-through securities issued by FHLMC, FNMA and GNMA113,487 (386)13,574 (2,356)127,061 (2,742)
Debentures of government- sponsored agencies— — 23,693 (6,294)23,693 (6,294)
Obligations of state and political subdivisions247 (3)50,616 (7,323)50,863 (7,326)
Total available-for-sale$284,341 $(772)$233,026 $(28,886)$517,367 $(29,658)

As of June 30, 2026, the investment portfolio included 67 investment securities that had been in a continuous loss position for twelve months or more and 127 investment securities that had been in a loss position for less than twelve months.

Securities issued by government-sponsored enterprises, such as FNMA and FHLMC, usually have implicit credit support from the U.S. federal government. However, since 2008, FNMA and FHLMC have been under government conservatorship and, therefore, contractual cash flows for these investments carry explicit guarantees by the U.S. federal government. Securities issued by GNMA have explicit credit guarantees by the U.S. federal government, which protects us from credit losses on the contractual cash flows of the securities.
Our investments in obligations of state and political subdivision bonds are deemed creditworthy after our comprehensive analysis of the issuers' latest financial information, credit ratings by major credit agencies, and/or credit enhancements.
No allowances for credit losses have been recognized on available-for-sale securities in an unrealized loss position, as management does not believe any of the securities are impaired due to credit risk factors at either June 30, 2026 or December 31, 2025. In addition, for any available-for-sale securities in an unrealized loss position at June 30, 2026 and December 31, 2025, the Bank assessed whether it intended to sell the securities, or if it was more likely than not that it would be required to sell the securities before recovery of its amortized cost basis, which would require a write-down to fair value through net income. Because the Bank did not intend to sell those securities that were in an unrealized loss position, and it was not more-likely-than-not that the Bank would be required to sell the securities before recovery of their amortized cost bases, the Bank determined that no write-down was necessary as of the reporting date.


Non-Marketable Securities Included in Other Assets

FHLB Capital Stock

As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock as determined by the Board of Directors of the FHLB. The minimum investment requirements can increase in the event we increase our borrowings with the FHLB. Shares cannot be purchased or sold except between the FHLB and its members at the $100 per share par value. On January 2, 2026 FHLB converted its legacy Class B stock into Membership-based stock ("Class B-1"), which is tied to membership asset requirements, and Activity-based stock ("Class B-2"), which is tied to borrowing activity. We held $16.7 million of Class B-1 shares and no Class B-2 shares included in other assets on the consolidated statements of condition at June 30, 2026. We held $16.7 million of legacy Class B FHLB stock at December 31, 2025. The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks, and they do not have a readily determinable market value. Based on our analysis of FHLB's financial condition and certain qualitative factors, we determined that the FHLB stock was not impaired at June 30, 2026 and December 31, 2025.

On July 24, 2026, FHLB announced a cash dividend on their Class B-1 stock for the second quarter of 2026 at an annualized dividend rate of 4.75%. The Bank expects to receive $198 thousand upon distribution in mid-August 2026.
In addition, the Bank received $199 thousand in special cash dividends on July 29, 2026, declared by the FHLB on the average Class B and Class B-1 membership stock outstanding during the first six months of 2026. Cash dividends paid on FHLB capital stock are recorded as non-interest income.